British firms led by oil giant BP gained a stronger foothold in China today by clinching deals worth more than $1.5bn (€1.2bn).
At a signing ceremony in London today, BP agreed to invest around $827m (€699m) to build and operate 500 petrol stations in the world’s most populous nation.
It also pledged to expand its petrochemicals plant in China’s largest city of Chongqing and is looking at a similar project to boost capacity in the southern boomtown of Zhuhai.
Other firms agreeing deals today included rival Shell, which will invest $200m (€169m) to manage petrol stations in the eastern province of Jiangsu in partnership with Chinese oil major Sinopec.
Kingfisher, which owns 15 stores in China including the world’s largest B&Q in Shanghai, has agreed a strategic sourcing agreement with Midea Group worth $75m (€63m).
The ceremony was hosted by Trade and Industry Secretary Patricia Hewitt and coincided with a visit to the UK by Chinese Premier Wen Jiabao.
Mrs Hewitt said: “When I was in China in January, I was struck by the dynamism of the place and the eagerness to do business with the UK – something I think British firms can capitalise on.”
China has became a major destination for overseas investment since its entry to the World Trade Organisation in December 2001 opened up key industries and offered reassurance that it would observe global trade rules.
Its economy has grown at an annual rate of more than 9% to become the sixth largest in the world, according to a report by the International Monetary Fund (IMF).
Economists believe this breakneck pace of growth has been an important factor in buoying neighbouring countries like Japan and lifting many Western nations out of a period of slowdown.
Demand among Chinese industries for raw materials such as crude oil has increased sharply as the government seeks to ensure the growth story continues.
But concerns are rising that the economy is overheating and the IMF report last month said growth of up to 9% annually could only be achieved through structural reforms.
There are around 3,000 joint ventures in China involving UK companies such as Shell and BP, which are keen not to miss out on the chance to build a bigger presence in the country.
State media report that car ownership in China is set to increase five-fold over the next 17 years as the nation becomes more reliant on oil imports.
BP chief executive Lord Browne said: “China, as one of the most rapidly expanding economies, offers significant opportunities for the group.”